Stagecoach mulls merger with Nat Exp

British bus and rail operator Stagecoach&rsquo;s proposed takeover boosted shares in rival National Express but gains were capped by fears that regulatory hurdles and debt deadlines could scupper a deal. <br /><br />Analysts said a tie-up would make a lot of sense for debt-laden National Express and help Stagecoach&rsquo;s earnings but some suggested National Express might instead have to push ahead with a capital hike given pressure on its balance sheet. <br /><br />National Express said on Sunday that Stagecoach had made a &ldquo;highly preliminary&rdquo; approach, proposing an all-share deal in which National Express shareholders would own no more than 40 per cent of the combined group.<br /><br />The new group would have a market value of about &pound;1.7bn, based on Friday&rsquo;s closing share prices. <br /><br />National Express shares closed the day up 10.5 per cent at 400p. Stagecoach closed marginally up 0.06 per cent at 157p.<br /><br />However, National Express slid over 20 per cent on Friday after a consortium led by Spain&rsquo;s Cosmen family walked away from a proposed &pound;765m offer that valued the group at 500p per share.<br /><br />Stagecoach&rsquo;s approach also implied a value of up to 500p a share for National Express said analysts at Collins Stewart while Panmure Gordon put the figure at 490p and Arbuthnot Securities at 480p.<br /><br />&ldquo;National Express remaining independent looks highly unlikely,&rdquo; Collins Stewart analyst Andrew Fitchie wrote, pointing to its lack of a chief executive, the need to cut a &pound;1bn debt pile and weakness at its US business.